Investors risk losing life savings with unregulated services, watchdog warns
The UK’s financial watchdog has warned everyday investors could lose their life savings if they pump cash into high-risk unregulated investment services.
The Financial Conduct Authority (FCA) has said the recent failure of Woodville Consultants, a litigation funder which raised cashed through unregulated loan notes, had revealed the risks facing investors.
Woodville collapsed in July 2026 after it was stung by high debt, hefty middleman commissions and external legal delays. The company raised over £300m by selling high-yield unsecured loan notes to retail investors and used the cash to fund law firms handling thousands of consumer claims, primarily in the motor finance scandal.
A loan note is a legally binding contract where an investor lends money to a company in exchange for regular interest payments and full repayment at a set date. Unlike traditional bank borrowing, loan notes allow companies to raise capital directly from the public without bank oversight or regulatory safety nets and in a different case to stock market investments, they are usually illiquid, meaning investors cannot trade or sell them if they need their money back early.
Lucy Castledine, director of consumer investments at the FCA, said: “Big, fixed returns are a warning sign, not a guarantee. Loan notes, mini-bonds and other speculative illiquid securities are high-risk investments and are not suitable for most people.”
She added “ordinary retail investors” should only invest through firms that are regulated otherwise they would have “little or no protection if things go wrong”.
Woodville had over £240m owed to investors when it defaulted on its repayments, prompting unpaid loan-note holders to force the firm into administration.
The FCA said it also observed concerning practices including consumers being encouraged to certify themselves as experienced or wealthy investors to enable investments to be promoted to them and firms promoting high-risk investments without the permission they need.
The regulator added there was unclear fees or hidden conflicts where those selling the investment may benefit from consumers investing.
Warnings signs for these sort of investments include pressure to act quickly, unclear explanations of how money could be lost, or claims that an investment is “asset-backed” without clear evidence of what stands behind it, the FCA said.